4. Objectives
– List and discuss characteristics of a “professional”
– Explain how those characteristics apply to the management
profession
– Define “ethics”
– Discuss various models / schools of ethical decision making
– Explain and apply the professional ethical codes of various
management professional organizations
– Explain how to resolve ethical dilemmas
– Give examples of recent ethical cases
5. Characteristics of a professional
– Communicates – Exhibits ethical
effectively professional
– Thinks rationally, behavior
logically and – Recognizes the
coherently influence of
– Appropriately uses political, social, eco
technical nomic, legal and
knowledge regulatory forces
– Integrates – Actively seeks
knowledge from additional
many disciplines knowledge
3-5
6. Ethics concepts
• Definitions
– Ethics
– Met ethics: where ethical
• Moral philosophy
principles come from
• Systematizing,
– Normative ethics: moral
defending, and
standards that regulate
recommending
right and wrong behavior
concepts of right and
wrong behavior – Applied ethics: specific
controversial issues
• Rules or standards
governing the conduct
of a person or the
members of a
profession
7. Schools of ethical
thought
– Utilitarianism: the – Justice: people
end justifies the should get what
means. they deserve
– Rights and duties: – Virtues: everyone
individuals have should do what is
certain rights; right, moral and
others should not virtuous
interfere with them.
8. Ethics codes in accounting
– Principles
• Honesty and fairness
• Objectivity and responsibility
– Standards
• Competence and confidentiality
• Integrity and credibility
9. Ethics codes in accounting
Association of Certified Fraud – Comply with lawful court
Examiners: orders
– Commitment to – No expressed opinion on
professionalism guilt or innocence
– Avoid illegal and unethical – Keep information
conduct, conflicts of confidential
interest – Reveal all matters which
could influence outcome
– Exhibit the highest levels of – Strive to increase
integrity competence and
effectiveness
10. Ethics codes in accounting
American Institute of CPAs – General Standards
– Principles of Accounting Principles
Professional Conduct – Responsibilities to
– Rules: Applicability Clients
and Definitions – Responsibilities to
– Independence, Colleagues
Integrity and – Other Responsibilities
Objectivity and Practices
11. Importance of Ethics in Accounting
Fraud
Fraud is an intentional deception, misappropriation of a company’s
assets, or manipulation of its financial data to advantage of
perpetrator.
Symptoms can include:
•Key executives appearing to be living beyond their means.
•Key executives have close associations with suppliers.
•Company uses several different banks, none sees full financial
picture.
•One or two individuals dominate the company.
12. Importance of Ethics in Accounting
Losses on the Way
• Losses due to Unethical Behavior:
– Costs of legal action taken against
perpetrators.
– Costs of reduced productivity.
– Increased unemployment as companies are
forced to downsize or go out of business.
– Economic loss to organization, hence to
society.
13. Solution???
Administer
Investigate
Effective
Motives for
Ethical and
Unethical
Internal
Practice
Controls
14. Motives for Unethical Behavior
High Situational Low
Pressures
High Opportunities Low
Low Personal Characteristics High
(Integrity)
Unethica Ethical
(Hall, 2004)
15. Effective Ethical Controls
• A code of conduct that applies to the
practice of a profession.
Objectivity Independence Due Care
Integrity
16. Effective Internal Control System
Control Risk Assessment: Monitoring:
Environment:
Identify, Analyze, and Entities’ Activities.
Influence Control Manage Risks
Awareness of Relevant to Financial
Management and Reporting.
Employees.
Information and Control Activities:
Communication:
Transaction Authorization –
Fulfill
Quality of Info Segregation of Duties –
Main
Impacts Reliability of Supervision – Accounting
Objective
Financial Statements. Records – Access Control –
s
Independent Verification
Safeguard Assets of the Ensure Accuracy & Reliability of ACCT
Firm
Records & Info Promote Efficiency in the Firm’s
Operations
(Dina,2008)
18. References
Hall, James A (2004). Accounting Information Systems. Thomson. South
Western.
Alexander, Jeffrey Craig, (2002). "Ethics in Accounting?" University of
Tennessee Honors Thesis Projects.
Catherine Gowthorpe.(2005). Creative Accounting: Some Ethical Issues of
Macro- and Micro-Manipulation. Journal of Business Ethics 57: 55-64,
2005. DOI 10.1007/S10551-004-3822-5.
Felix Pomeranz, (2004),"Ethics: toward globalization", Managerial Auditing
Journal, Vol. 19 Iss: 1 pp. 8 – 14.
